(a) Calculate the sales mix variance, the sales quantity variance and the sales volume variance for each product and in total for the month of December 2019. (b) The new sales manager believed that he could have talked a major customer of Mint Chill into accepting a smaller discount resulting in the overall actual price/block for Mint Chill increasing by 50 cents. There would be no effect on sales volume. i. What would be the effect on the selling price variance for Mint Chill if the actual results shown above were changed due to the sales manager's work with the major customer? ii. What would be the effect on the sales mix variance for Mint Chill if the actual results shown above were changed due to the sales manager's work with the major customer? (c) For this question ignore the scenario proposed in Question (b). Calculate the market size and market share variances for BCF for the month of December 2019. (d) Explain how your calculated variances relate to BCF's performance. What actions, if any, might responsible managers in BCF need to take after looking at these variances? The Boutique Chocolate Factory The Boutique Chocolate Factory (BCF) is based in Dunedin and supplies chocolate across Otago. The firm only produces three distinct flavours of chocolate, being Rich Dark, Mint Chill and Cranberry Vintage. BCF has substantially increased its sales since the Cadbury chocolate factory in Dunedin closed down in 2018. Budgeted and actual sales data for its 1kg blocks of chocolate for December 2019 are shown in Exhibit 1. BCF forecasts a 25% market share of total 1kg blocks of chocolate sold in Otago in December 2019 in Springfield. Reliable industry sources indicate that the total number of 1kg blocks of chocolate sold for December 2019 in Otago was 12.5% higher than budgeted. Exhibit 1 Budgeted and actual data for December 2019 Budgeted Data Actual Data Cranberry Vintage Mint Mint Cranberry Rich Dark Chill Rich Dark Chill Vintage 1kg Blocks 7,200 4,800 4,000 10,800 3,600 7,200 Contribution Margin $18,000 $19,200 $20,000 $21,600 $10,800 $54,000 1

(a) Calculate the sales mix variance, the sales quantity variance and the sales volume variance for each product and in total for the month of December 2019. (b) The new sales manager believed that he could have talked a major customer of Mint Chill into accepting a smaller discount resulting in the overall actual price/block for Mint Chill increasing by 50 cents. There would be no effect on sales volume. i. What would be the effect on the selling price variance for Mint Chill if the actual results shown above were changed due to the sales manager's work with the major customer? ii. What would be the effect on the sales mix variance for Mint Chill if the actual results shown above were changed due to the sales manager's work with the major customer? (c) For this question ignore the scenario proposed in Question (b). Calculate the market size and market share variances for BCF for the month of December 2019. (d) Explain how your calculated variances relate to BCF's performance. What actions, if any, might responsible managers in BCF need to take after looking at these variances? The Boutique Chocolate Factory The Boutique Chocolate Factory (BCF) is based in Dunedin and supplies chocolate across Otago. The firm only produces three distinct flavours of chocolate, being Rich Dark, Mint Chill and Cranberry Vintage. BCF has substantially increased its sales since the Cadbury chocolate factory in Dunedin closed down in 2018. Budgeted and actual sales data for its 1kg blocks of chocolate for December 2019 are shown in Exhibit 1. BCF forecasts a 25% market share of total 1kg blocks of chocolate sold in Otago in December 2019 in Springfield. Reliable industry sources indicate that the total number of 1kg blocks of chocolate sold for December 2019 in Otago was 12.5% higher than budgeted. Exhibit 1 Budgeted and actual data for December 2019 Budgeted Data Actual Data Cranberry Vintage Mint Mint Cranberry Rich Dark Chill Rich Dark Chill Vintage 1kg Blocks 7,200 4,800 4,000 10,800 3,600 7,200 Contribution Margin $18,000 $19,200 $20,000 $21,600 $10,800 $54,000 1

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 5CE: Saginaw Company is a garden products wholesale firm. In December, Saginaw Company expects to sell...

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